US stocks resilient amid Fed shutdown

ROLLER-COASTER TRADE:US shares rebounded on Friday even as the government shutdown dragged into a fourth day, with investors optimistic about a potential deal

AFP, NEW YORK

US stocks weathered the first government shutdown in 17 years this week a little bruised, but investors clung to hope the budget impasse will soon be broken.

The Dow Jones Industrial Average of 30 blue-chip stocks fell 1.22 percent over five trading sessions to finish at 15,072.58 points on Friday, its second week in a row in the red. The NASDAQ Composite edged up 0.69 percent to 3,807.75. The S&P 500 ended down a scant 0.07 percent at 1,690.50.

“Another day has passed and the government shutdown continues,” said Joe Bell, senior equity analyst at Schaeffer’s Investment Research.

“We ended the week on a bit of a positive note, as most major sectors finished in the green after a few days of negative price action,” Bell said.

US stocks rebounded with solid day-on-day gains on Friday as the partial government shutdown dragged into a fourth day, with little prospect of a compromise between Democrats and Republicans.

“Equities climbed throughout the session, while showing little concern over the lack of progress in the Capitol Hill stalemate,” Briefing.com analysts said in a market note.

With US President Barack Obama and Republicans at loggerheads over passing a spending measure to get the government fully operating again, concerns were rising the fight would roll into a face-off over raising the nation’s debt ceiling by the Oct. 17 deadline — but apparently not enough to convince investors that a deal on both issues was out of reach.

“Based on the price action in the financial markets today, investors are not worried that the US will default on its debt. Stocks rallied, bond yields moved higher and the [US] dollar strengthened against the euro, British pound and Japanese yen,” Kathy Lien of BK Asset Management said.

Wall Street had an “interesting week” of up-and-down trade, as investors “don’t want to miss the relief rally that we will most assuredly get” if the budget dispute is resolved, Art Hogan of Lazard Capital Markets said.

“If we are still talking about this next Friday, the market is going to be lower,” he added.

In corporate news, Apple was in focus after activist investor Carl Icahn said on Tuesday he wanted Apple to launch an additional share buyback of US$150 billion to help boost its struggling stock value. Apple, the biggest component on the NASDAQ, shot up 2.4 percent on Wednesday, but ended on Friday down 0.1 percent for the week.

Tesla shares roller-coasted this week after a video of a fire in a Tesla luxury sedan left analysts debating whether the electric car maker’s promise justified its huge share price gains.

Tesla shares had surged 470 percent from January to a record YS$194.50 on Monday, before a video of the burning car came out on Tuesday and sent them tumbling to about US$173. A rebound on Friday pushed them back up to US$180.80, still 433 percent higher since the year began.

As for initial public offerings (IPO), the Empire State Realty Trust, which owns the Empire State Building in Manhattan, finished the week at US$13.15, up from the issue price of US$13. Sandwich shop chain Potbelly raised US$105 million in its IPO on Friday, as shares more than doubled from its IPO price to US$30.77.

Markets were left largely without official economic data after the partial government shutdown that began on Tuesday. Most critically missed of the major economic reports was Friday’s data on job growth and unemployment.